Digitization and process knowledge, the keys to efficient outsourcing

10 July, 2019

In 1995, the network inventor and Ethernet creator, Robert Metcalfe, said that the Internet would “soon go spectacularly supernova.” He even ventured to say that, in 1996, it would “catastrophically collapse.”

Obviously, that prediction never came true; quite the opposite: the use of the Internet grew in geometric progression to become a global phenomenon with more than 4.4 billion users and a power of economic and social transformation almost without precedent in the history of the Humanity.

That was an era marked by rapid technological evolution that would soon produce a major paradigm shift in the Telecommunications sector, as a foretaste of what has subsequently been extended to the Industrial sector.

In the decade of the 2000, the great Telecommunications operators were dragged down by big, expensive labour costs and productive structures, and sought the highest possible profits in a fiercely competitive market. That led them to launch the first major outsourcing wave, with all tasks with higher labour costs, such as installation, maintenance or network construction being outsourced.

The recipients of this were core technological service companies focused on optimizing the service process, like Dominion, which acquired a high profile in the Telecommunications industry thanks to its expertise in processes and its capability to improve results by incorporating technological tools.

The telecommunications sector has experienced a deflationary process: the major operators have embarked on a commercial war consisting of offering more and more services, such as higher internet speed, fibre optics and television, at lower prices. Dominion managed to overcome the increasing cost pressure from large operators with a formula based on the implementation of technology, knowledge of processes and efficiency. This know-how has consolidated it as a benchmark in the Telecommunications sector.

The introduction of technological tools such as its SGS management system has allowed it to optimize personnel management and task organization while increasing the efficiency of all processes. In parallel, the digital transformation has democratized technology and made processes cheaper, thereby encouraging large operators to take up some of the tasks they once outsourced.

“There has been a re-sourcing process motivated by factors such as greater integration of suppliers and services, increased in-house capabilities and technological skills and a search for greater economic efficiency,” explains José Beny López Piñeiro, head of Last Mile Operations at Dominion.

All this has placed the Telecommunications sector at the threshold of its maturity, but it has also helped Dominion acquire valuable expertise that is transferable to other productive sectors, such as industry and the electrical sector.

Industrial O&M within the framework of Industry 4.0

Historically, services in the industrial sector have operated under a paradigm based on manual processes, with a large amount of labour and rigid operating schemes. The deflationary and outsourcing process in the telecommunications sector has not taken place in the same way in the industrial sector. But the experience developed in other sectors has opened the door for Dominion to develop a different, more efficient, integrated way of doing things, with the implementation of technology in the various production processes and under variable contractual formulas, in which remuneration depends on the level of efficiency reached. As Beny López says, the Industry is a “window of opportunity to provide value that we must take advantage of.”

“For example, when an industrial company outsources an activity it is usually based on man-hour contracts, which contribute added value solely to the client. Dominion manages that engineering more intelligently and less expensively, allocating resources more efficiently, and distributes those profits to the end customer,” explains Beny.

This is possible thanks to two factors: on the one hand, digitalization and, on the other, Dominion's expertise in industrial processes. This know-how encompasses the One Stop Shop value proposition, employed by Dominion to integrate under the same roof the various operation and maintenance needs of an industrial plant, such as processes related to heating, electromechanics, IT and environmental services. This concept, which allows it to combine a global presence and a multi-sector capability, results in a more efficient redistribution of resources with, for example, an operator carrying out various activities centrally.

“The key is not only to have the technology, but to know how to use it to make all processes more efficient and optimize production. Technology makes it possible to carry out tasks with a lower cost, but it is the knowledge of those processes that allows us to add value and exploit those technological tools to increase efficiency,” he concludes.

Both the industrial and electrical sectors are markets that will have to face major changes in the coming years, where improvements in operational efficiency and maintenance will be essential for companies to remain competitive in a global environment. Dominion has the process expertise and technological capability to make it the ideal partner to take on this transformation.

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